I thought working meant EARNING money, however on my path to financial independence I have looked at all our expenses, and was shocked to find how much we really SPEND at work:
£13,620 per year or £1,135 per month
So, how the heck is our figure so high? To give some context we are a couple working full-time, with one toddler in full-time childcare. Here is our list of costs in order of size, as well as some non-monetary costs for good measure.
Childcare, £675… We pay for full-time daycare for our toddler, this is after government tax free childcare (otherwise it would be £845). This is only needed until he is school age, even then we will need before and after school care if both working full-time. Don’t even get me started if there was a baby 2, that would mean doubling the price.
Food, £240… This is embarrassing because we have been lazy and getting breakfast / lunch on the go. The ‘latte effect’ is clearly in full swing, once we grab a tea each(£1), breakfast pastry (£1) and some lunch(£3.50) it adds up to £11 a day, and over the month grows to £240. We have started to pack lunches and make teas at home for on the go, this really has helped the budget, and our waistlines.
Commuting, £160… We commute together 10 miles each way, petrol is £4 and parking is £3.60 per day. This figure doesn’t include maintenance or other costs with car ownership. I used this calculator to figure out the petrol costs.
Work clothing, £30… We don’t spend much on work clothes, this category is for professional office clothes, shoes and coats etc.
Work nights out, £30… We both have sociable teams and enjoy meals out or drinks every few months, not an office cost but for sure associated with work life.
The Hidden Costs of Working
Not all costs of working are monetary, some are unknown or difficult to calculate. Take the examples below of time, energy and opportunity costs.
Time saves, unknown… Aside from sleep, we spend most of our time at work (60 hours a week in fact), this means less time for other tasks. To save time some may pay to have the car washed, or trim the hedges, or clean the house etc. The ironic part is because we are at work spending time to earn money, we have little time elsewhere, meaning we have to spend money to have basic tasks done, it’s a vicious cycle. For the record we don’t pay for these items but have done in the past on a few occasions.
Energy cost, unknown… You know these expenses, getting a takeaway because you’re exhausted from work, or the convenience foods instead of planning a proper food shop. Buying something in a rush or for convenience because we don’t have the energy after work. I find it difficult to switch off from the mental stresses of work and find it drains my energy levels, so am more likely to cut corners elsewhere for convenience.
Opportunity cost, unknown. These are the things I miss out on while being in work. Not being able to spend time with my family (old and young) because I work so much. Missing out on a friend coming to town because I can’t get the day off. Working also means I don’t get to focus as much on passions and hobbies as I would like.
As you have seen our household has large costs towards childcare, but even without that we are paying a significant amount on food, travel and hidden extras. The key to being able to build wealth and financial independence is keeping costs down. Luckily if we retire early or cut back on full-time work we will definitely cut these numbers.
So what is the point of telling you all this?
Work expenses are insignificant per day or week, but when you take these numbers and add them up over the months and years, or say over a career of 45 years, it is then you realise the full impact of these costs.
Work related expenses may be a reason you find it difficult to build wealth, and a reason people stay trapped in the rat race well into their 60’s and beyond. By controlling all aspects of money in and out of your life you could be on the path to financial independence. It is up to you whether you do anything with this information.
Do you know how much you are spending on work related expenses? Tell me on social media if you want to share or discuss, I’m always happy to talk money and spending, like I mentioned before it is my mission to help as many people as possible get to financial independence, or on their way to early retirement.
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